L1: Monthly SEPPI wish to take SEPP monthly for 60 months (current age 55). If I take my first SEPP on 8/25/2010, must I wait till the 25th of all subsequent months to take subsequent SEPP?
2010-08-23 14:43, By: Rupertdacat, IP: [126.96.36.199]
L2: Monthly SEPPYou can change the frequency ( monthly, quarterly, semi-annual, annual), and/or the date of each payment, and the amount of each payment.
The only requirement is that the ANNUAL TOTAL be the same EVERY CALENDAR YEAR, except the first year which can be either prorated ( 5/12 if starting in August, regardless when you take your other payments before 12/31), or the full annual amount for 2010.2010-08-23 17:01, By: dlzallestaxes, IP: [188.8.131.52]
L3: Stub yearThank you very much dlzallestaxes. I have read before the same thing as what you state about pro-rating the first year’s withdrawal. It is often referred to as being a “stub year.” The problem I am having is that I cannot find documentation of that in the published IRS regulations at http://www.irs.gov/pub/irs-drop/rr-02-62.pdf. May I ask what makes you confident on this point?
2010-08-23 17:29, By: Rupertdacat, IP: [184.108.40.206]
L4: Stub year
Regarding my last question, above, I found the following at http://72t.net/72t/FAQ#Faq10:
Q. Can distributions be made monthly? A. While payments must be made at least annually, several letter rulings address the subject of monthly payments.
PLR 8919072 – The annual distribution amount was distributed as 12 equal monthly payments.
PLR 9050030 – The distributions were calculated as monthly distributions using a monthly compounding rate. In this ruling the remaining life expectancy was was converted to months by converting the fractional life expectancy to the nearest whole month.
PLR 200105066 – The annual distribution was divided by 12 with the first payment to be made in July – only six payments were made in year 1 with the second annual payment calculated in January of the following year.
That would appear to be definitive.
?2010-08-23 17:51, By: Rupertdacat, IP: [220.127.116.11]
L4: Stub yearAll of the experts on this website are confident in this approach, and have been recommending it for years. Usually,I think thatthe term “stub year” refers to the final year, not the first year.
Someone will give you their IRS citation.
By the way, we also recommend that you get your DECEMBER payments early in the month in case there is any delay or error. Never trust any financial institution to make the payments correctly and on time every month, let alone in Dec. This way you will have time to make any correction before 12/31 to amke sure that EVERY CALENDAR YEAR has the correct annual total.2010-08-23 17:54, By: dlzallestaxes, IP: [18.104.22.168]
L5: Final word on pro-rating 1st year’s withdrawal?Thanks, again, dlzallestaxes. The following also provides useful info regardingIRS’s stanceon pro-rating the first calendar year’s withdrawal:
I would not have had the confidence to initiate my SEPP plan in a couple of days if not for 72t.net and its contributors.
Thanks to all…
2010-08-23 18:29, By: Rupertdacat, IP: [22.214.171.124]
L6: Final word on pro-rating 1st year’s withdrawal?Re: stub year – I don’t recall ever seeing “stub year” used by the IRS, and I have been using it as a general descriptive term for any year of the plan that is less than a full calendar year, ie. first stub year vrs last stub year. I note that the brentmark link uses the term “short year” to describe these years. Short and stub are basically synonamous. I doubt that there is any IRS lingo that differentiates the first year from the final year, since the IRS has chosen not to publish formal Regs for much of Sec 72.2010-08-23 21:08, By: Alan S., IP: [126.96.36.199]